© ABB Group - Introduction to ABB Technology Venture March, 2012 | Slide 1

ABB Technology Ventures The Art of Corporate Venturing www.abb.com/ventures

Dr. Kurt Kaltenegger, CTO ATV, Ecosummit Berlin 2012

Aquamarine flap 800 kW

© ABB Group April 13, 2012 | Slide 2

How ABB is organized Five global divisions

Power Products

Power Systems

Discrete Automation and Motion

Process Automation

$10.3 billion 35,000

employees

$7.7 billion 19,500

employees

$8.4 billion 27,500

employees

$7.8 billion 28,500

employees (2011 revenues, consolidated)

Low Voltage Products

$5.0 billion 21,000

employees

§  Electricals, automation, controls and instrumentation for power generation and industrial processes

§  Power transmission §  Distribution solutions

§  Low-voltage products

§  Motors and drives

§  Intelligent building systems

§  Robots and robot systems

§  Services to improve customers productivity and reliability

§  ABB’s portfolio covers:

© ABB Group - Introduction to ABB Technology Venture March, 2012 | Slide 3

§  Typical deal criteria: §  $1-$25 million USD with reserves for follow-on

§  4-6 deals / approx. $70 million per year

§  Geography and stage agnostic

§  Often partner with leading VCs, e.g. DFJ, VantagePoint, Investor Growth Capital, Mission Point

§  Investment must meet traditional VC financial return requirements and have “credible” strategic value to ABB

§  Linkages with ABB business units and R&D/technical resources to ensure additional investment value-add

Girish Nadkarni Managing Director Head of ABB Technology Ventures

Kurt Kaltenegger Head of Technology

Andrew Tang Managing Director

Grant Allen Vice President

ATV ABB Technology Ventures

§  Investing in early stage companies with Technologies of strategic interest to ABB

§  Small team with global business and technology due diligence support from ABB

§  Active R&D, commercial and operational support to portfolio companies

Strategic themes

v Renewable Energy v Smart grid v Energy Storage v Energy Efficiency v Discrete Manufacturing v  Intelligent Sensing v Water Technologies v Waste to Energy

CleanTech Award 2010 San Francisco 2011

© ABB Group - Introduction to ABB Technology Venture March, 2012 | Slide 4

In the past ………. traditional VCs: financing & building companies (Intel, Compaq and Apple)""Ø  SW companies in the 1980s, dotcoms in the 1990s changed everything! "concept à revenue à exit (even not fully functioning business): very short time, with little capital è gigantic returns VC portfolio is dynamic: from 10 portfolio companies, 3 failed, 3-4 did OK and 3-4 had superior returns

Now, VCs looking for the one company with a 100x return:

•  Starving all others of funding and attention and •  Pre-money valuations went through the roof!

We need a different approach!! ….. how CVC & VC co-invest in Cleantech!

In Cleantech:

•  long and complex gestation period •  significant larger capital requirements (e.g. proof of concept to scaling, cost BrightSource $150MM) •  no 10x returns in Cleantech •  not in driving distance, not within geographical sphere •  no former portfolio companies to buy your current investment •  public markets too volatile and unreliable for exit •  20-30 year warranties to be given

There is an urban myths (capital intensive, too long etc.) ……………. (Bart Markus, Wellington Partners) but „utility and commercial size Technologies” are often as said.

The sustainable Art of Corporate Venturing

© ABB Group - Introduction to ABB Technology Venture March, 2012 | Slide 5

Sustainable cooperation (co-investment) and symbiosis model for VCs and strategic investors LPs (funding VC firms) to adjust expectations Strategics (like ABB or companies as critical part of the supply chain) add value through support on:

i. Technology ii. Product development iii. Sourcing and building a supply chain iv. Commercialization v. Credible Exit ATV: Business people on board when ever possible

Success factors (what we are doing different): strong link to business to support portfolio company How to manage terms:

•  Put/call arrangement between strategics and the VCs guaranteeing the VCs a return of 3-4X if the company hits certain pre-agreed milestones

•  Strategics not to be forced to pay significant premium for value brought in •  VCs from targeting 10X returns for 2 of their portfolio companies, to targeting 3x for 3-4 of their portfolio

companies •  To be aware of certain risks

Model to be discussed further ……….

The sustainable Art of Corporate Venturing

© ABB Group 091023- Introduction to ABB Technology Ventures November 1, 2011 | Slide 6 © ABB Group 091111- ATV Investment Strategy & Policy April 13, 2012 | Slide 6

long term

Profitable Growth Opportunities

Grow existing business Develop new business

short term mid term Technology & Market Trends

New enabling Technologies

Expected Game Changer

Market Development Scenarios

Topics to search Growth Strategy (market, portfolio, …)

Interesting Growth areas in proximity to today’s business

Filter criteria •  Mgmt team •  IP •  Stage •  Costs •  Exit •  etc.

visualization of vision

Scenario mapping as the key input

… Technology Ventures

KPI: BUs NPV

Why do we need a corporate venture capital group?

© ABB Group - Introduction to ABB Technology Ventures January 12, 2012 | Slide 8

Teaching ABB businesses to be paranoid!!!

Smart Grid

Renewables

Cyber Security

Thousands of Start-Ups

Emerging Technologies Emerging Competitors

Where Should a Corporate Venture Capital Group Play?

Proximity to current market

Pro

xim

ity to

cor

e te

chno

logy

High

Low

Low

CVC should push technology & market boundaries with potential for large payoffs

Leve

l of t

echn

olog

y in

nova

tion

or p

oten

tial

disr

uptio

n

Potential Market Size

Low

High

$0 > $500 MM

© ABB Group - Introduction to ABB Technology Ventures January 12, 2012 | Slide 9

Achievements to Date §  Created active global deal pipeline

§  Acquired status of preferred investor

§  Evaluated over 1,000 potential investments

§  Identified and educated businesses on numerous emerging technologies, business models and market segments

§  Invested ~$100 MM in 8 companies, including 4 refinancings

§  Invested in 2 cleantech venture capital funds

§  Facilitated preferred supplier and marketing agreements with portfolio companies

§  Appointed various business people on Boards of portfolio companies

§  Identified numerous acquisition targets including Ventyx and Powercorp

§  Spoke at over 50 industry and VC conferences

§  Awarded Cleantech Company of the Year in 2010 for investment activity

§  Initiated and led numerous industry segment studies to identify emerging trends and potential investment targets

§  Speaking partner for business and technology strategy for BU’s and ISI’s

© ABB Group - Introduction to ABB Technology Ventures January 12, 2012 | Slide 10